After completing a very nice 2019 and 2018, the Dogs of the S&P seem to be more challenged in this year, 2020. Even with the positive effects of dynamic weighting, quarterly reballancing and no cost trading, it is still a tougher year than most. Compared to most income based investments that are yielding in the range of 5.5%, Dogs of the S&P have done comparably very well.
Dogs of the S&P 500:
Annual Cost: 0.50% or 1/8 of a percent per quarter.
Average Dividend Yield of About: 5.50%
Minimum Investment: $15,000
Minimum Holding Period: None
Dividend Rate 51/2%:
To us the market is basically trying to find a path out of this rough market. One of the best options for those needing and wanting more income is owning the very high dividend income S&P aristocratic companies provide.
This portfolio is designed to be an income generator in dividends, and is not a fast growth portfolio; it is based on its dividend income, and provides income generation above many bond funds which is very surprising knowing the dividend income attains a lower tax treatment.
Those who know about aristocratic companies know that they have a history of outperforming over time. So not only is this a good income generator but it possibly, in time, will give higher principal appreciation.
The one factor that really sets it apart is the increased dividend that each and every company in the portfolio must provide or be removed from the portfolio. It is very hard to find a portfolio where the income growth is a focus, and rare yet in today’s large companies where many CEOs focus on their own income and not their duty to shareholders.
The Dogs of the S&P 500 portfolio works by selecting 10 concentrated high dividend aristocrat companies from the S&P 500, which are the largest companies in our country. The concentration could increase risk.
Very low interest rates make it hard for people to find a livable income stream especially now in North America. With many areas like Europe and Japan currently having negative interest rates, this greatly increases the problems of near retirement and retirement ability to generate enough income, making it even harder to find those investments, for investors looking for a strong total return.
For those looking to step into the market now, the Dogs of the S&P deserves a real review. This could be a welcome alternative for income investors willing to take some market risk for future growth, but also get an exceeding high current dividend income.
We offer our successful investment strategies of Dividend Aristocrats (along with many Dogs Portfolios) to other Charles Schwab Registered Investment Advisors through segregated accounts.